Market conditions are often changing. Prices might increase, decrease or remain in a certain range. Traders use different indicators and strategies to trade in different market conditions. Therefore, it is important to understand and identify a Bull Market while it’s still forming in order to trade effectively.
Bull Market definition
Bull Market is a market condition where prices are increasing or are expected to increase.
Why is understanding the Bull Market important for traders?
- Bull Markets require different techniques and indicators to trade profitably.
- Identifying Bull Markets from the start might provide great trading opportunities.
- The Bull Market is not constant, yet it may last for years if not decades for some assets.
- Strong Bull Markets can provide entries for joining the trend.
- Weakening Bull Market might give you clues to get out of the trend or prepare for reversal.
Thorough Bull Market Explanation
Bull Markets are easy to spot on the charts. You need at least 4 points, 2 higher highs, and 2 higher low prices to confirm a bull market. The higher highs and higher lows a Bull Market has the stronger the trend is.
For trading Bull Markets traders are usually using moving average indicators for entries and volume indicators for measuring the strength of certain markets.
When you join a Bull Market, you want a strong volume from other traders that help the trend continue. The loss of volume might indicate the loss of interest and cause the reversal.
Keep in mind prices have various dimensions. The price might be in a Bull Market of 15 min timeframe and in a bear market in 1 day time frame. Generally trends are stronger in higher time frames due to reduced market noise.
Example of Bull Market in Forex
Bull Market in Forex occurs when the base currency is getting stronger than its quote currency. Bull Markets are often replaced by range markets or downtrend, bear markets. It’s hard to predict when the change will happen, therefore traders’ main objective is to identify the trading conditions that complement their trading strategy and place orders accordingly.
FAQs on Bull Market in Trading
How long can a Bull Market last?
There’s no exact answer to that question. However, Bull Markets can potentially last endlessly in certain markets. For instance, stock prices are not limited in terms of how high they can grow. On the other hand, currency prices are changing in relation to other currencies and are more in range.
What indicates a Bull Market?
On a chart when the price of a certain asset is increasing, i.e. the price gets higher highs and higher lows, we have a Bull Market. In order to confirm a Bull Market, you need at least 4 points on the chart.